Karen Paz Dominguez, Humboldt County’s elected auditor-controller, is tasked with reviewing countywide finances and accounts, serving as the “chief accounting officer” of the county.

For some time now, she hasn’t been able to fully carry out those duties, leaving open the possibility of serious financial misuse, she said.

In February, Paz Dominguez said she discovered her office had been denied access to the county’s payroll documents, leaving paychecks for over 1,000 county employees free from supervision or audit.

Paz Dominguez knew the county’s payroll division had been moved in November from the auditor-controller’s office to the purview of the Human Resources department. She had arranged to meet with Human Resources director Lisa DeMatteo the next day to iron out the transition process.

But the language of the transition, as approved by the Board of Supervisors, mostly meant that Human Resources would oversee the preparing of paychecks, not that the department would retain full and final oversight over payroll.

Now, Paz Dominguez found she was no longer allowed to view payroll documents to make sure they were legitimate, she said.

“Please reinstate all of our access to any and all payroll folders right away,” Paz Dominguez wrote in a Feb. 14 email to DeMatteo. “We are the internal auditing function of the county and we will retain access to all payroll documents regardless of where the ‘payroll’ staff moves to.”

“The information has now been jeopardized as payroll staff has deleted and/or moved records,” Paz Dominguez continued. “The whole implementation of the move of payroll staff was so poorly planned that I am now considering this a threat to the public’s interest.”

But when the meeting took place, it didn’t amount to much, Paz Dominguez says. She laid out her job description, telling DeMatteo the auditor-controller needs to see payroll to prevent errors or oversights in the accounting.

She says DeMatteo didn’t directly address what she said, instead offering only that she disagreed with Paz Dominguez’s interpretation of how the process works.

“What I’ve experienced in the auditor-controller’s office (with Human Resources) is a level of obstruction that I’ve never seen before,” Paz Dominguez said in an interview.

In California government code, the auditor-controller’s job is to “exercise a general supervision … over the accounting forms and the method of keeping the accounts of all offices, departments and institutions” using county funds.

At a November meeting, the county Board of Supervisors approved transferring the “human resources functions” of the county’s payroll division to the Human Resources department, a move that placed staff positions in charge of payroll under HR’s purview.

Much of the staff report for the agenda item concerns the specifics of transferring staff positions, including the various responsibilities behind “running payroll” for the county. The staff report makes no mention of whether the transition would limit the auditor-controller’s future access to payroll documents.

Without the auditor’s oversight, Paz Dominguez said, the door is left open to financial misuse or misconduct. A fictitious employee could be created and paid any sum of money, she said, and no one would be able to audit the payroll and find it.

In response to the Times-Standard’s questions about the agenda item, the auditor-controller’s access to county finances and Paz Dominguez’s version of events, county spokesperson Sean Quincey sent an emailed statement.

At a November meeting, the county Board of Supervisors approved transferring the payroll division from the auditor-controller’s office to Human Resources. (The Times-Standard file)

In it, Quincey writes that the auditor-controller has “access to all the county’s monies and accounts for auditing functions within her office’s area of responsibility.” The county often uses outside auditors for the county’s books and financial statements, he said.

“That said, all county departments create and maintain various financial and accounting documents and spreadsheets as a part of their own operational functions,” he continues.

“Sometimes two (or more) departments have overlapping responsibilities for the same monies or accounts. This is typical, especially in governments where there are often a series of checks and balances around the spending of public funds.”

He noted that payroll responsibilities had been transitioned from the auditor-controller’s office to Human Resources — a process that’s “still ongoing,” he said.

“So, this is an area where there are some overlapping areas of responsibility that will likely have less overlap moving forward.”

Because of county policy in responding to media requests, DeMatteo was not reached for comment on Paz Dominguez’s account. Neither was county administrative officer Amy Nilsen, who Paz Dominguez said has acted as a mediator between the two parties.

Nilsen and other county staff advised Paz Dominguez to take DeMatteo out to lunch to settle the conflict, Paz Dominguez said.

“It’s all ‘building relationships,’” she said. “You shouldn’t have to take someone out to lunch to get them to comply.”

(Contributed)

Brian Muir, the auditor-controller for Shasta County, said moving payroll to Human Resources should never mean blocking the auditor’s access from pertinent financial documents.

“She’s the chief financial officer,” said Muir, a county auditor for two decades. “You can’t have people creating checks and not allowing the auditor to audit their work. That’s crazy.”

He and Paz Dominguez shared the same sentiment about the auditor-controller’s role: In the event of a financial mishap, it’s their job on the line.

“I take it personally when someone stands in the way of me doing my job,” she said. “I can be personally liable for wrongdoing. You are not going to sit there with me when I have to sit there with the state auditor. You’re not going to be with me in the unemployment line when I get booted off and lose re-election.”

Paz Dominguez was elected to her office last June following a tumultuous election cycle uncharacteristic of an auditor-controller race.

Weeks before the election, staff in the auditor-controller’s office authored a letter criticizing Paz Dominguez — then the assistant auditor-controller — for creating a hostile work environment in the office.

In the letter, staff members said Paz Dominguez “fostered an atmosphere of hostility, retaliation and bullying” in the workplace. The county publicly released the letter after it was leaked online, but redacted the names of the employees who signed it.

Some of those employees worked in the payroll division, Paz Dominguez said.

“I started asking questions about payroll, specifically the security of documents and the accountability of calculations,” she said. “That was not appreciated by payroll staff.”

She said she understood the backlash.

“It’s human nature,” she said. “When you have a job and someone comes out of nowhere and starts saying all this stuff, you don’t like it.”

She speculated that the Board of Supervisors’ decision to transfer the payroll division, which occurred while Paz Dominguez was on maternity leave, stemmed from the earlier hostility.

But none of that, she emphasized, should prevent her from doing her job.

“The auditor-controller is just another form of law enforcement,” she said. “If someone is actively obstructing that, it’s a real problem.”